I.Objectives McDonald's mission was to provide customers with quality food at a low price with a focus on the speed, service and cleanliness they received while patroning one of their restaurants. The case focuses on a specific segment of the McDonalds restaurant chain that was opened in 1996, McDonald's India.
This segment of the restaurant giant had a more specific mission/philosophy to fulfill and had developed a special menu for these Indian customers to take into account their culture and religion. When it was realized that beef extracts were found being used in producing McDonald's fries, outraged vegetarians and Hindus across the United States and Canda filed a class action lawsuit. Along with this, riots and demonstrations at restaurants in India took place, with mobs calling for the closure of all McDonald's in India.
II.Customer Scenario By 2001, McDonald's had expanded its operations to 116 countries with a total of over 30,000 restaurants. McDonald's sold to over 15 billion people every year! The company's target market encompassed everyone as they tried to offer menus that accommodated fast food lovers, vegetarians, the health-conscious as well as different religious sects.
III.Nucleus of Control McDonald's restaurant chain is comprised of company owned restaurants as well as franchised restaurants, which make up over 65% of the operating McDonalds outlets; because of this many of the restaurants are controlled and run separate from one another. The whole segment of McDonald's India has a board of managing directors that oversee McDonald's operations in India. From a management standpoint, McDonalds can be seen to have different varying stances.
The company can be viewed as a mature company that was introduced over 65 years ago and now encompasses virtually the entire globe with its operations. However, it seems that McDonald's, large in size already, keeps expanding internationally as well as in the United States. While many of these newly opened restaurants are separately run franchises, it seems that while the McDonald's name and idea may be mature, the company as whole seems to still have a growing, entrepreneurial stance.
IV.Functional Analysis A.Top Management The company was started by two brothers, Richard and Maurice McDonald and was later purchased by a current supplier of the company, Ray Kroc. As stated before, many of the restaurants were franchised and managed and were not company operated. In October 1996, when McDonald's opened their first restaurants in India, Managing Directors of McDonald's India were put in place.
The two directors were Vikram Bakshi and Amit Jatia. These two directors worked in the restaurant business with Bakshi coming from Connaught Plaza Restaurants and Jatia of Mumbai's Hardcastle Restaurants. These two directors with a background of the industry as well as the region's cultures and religions are suited to complement the management, employees and customers of the 28 McDonald's outlets located in India. B.Marketing
McDonald's has mass-marketed a low priced meal that is served quickly. The first restaurant was opened in California and has spread to include 121 countries around the globe. Advertising has been one of them most important factors in helping to trigger the corporation's global expansion.
This is done effectively through every media from newspaper promotions, to radio and most importantly television. McDonald's ads have always featured celebrity endorsements from athletes to rock stars. In the early 1990's McDonald's marketing research led to many new product introductions and menu changes to accommodate the health conscious.
In 1993, McDonald's expanded their operations from stand alone restaurants to joint ventures with restaurants placed in Wal-Mart stores, in Amoco and Chevron gas stations and all throughout Disney's theme parks. In more recent years, McDonald's has tried to market healthier choices on their menus as well as the contents and nutrition of the foods they sell. Some foods were also classified as vegetarian choices: garden salads, french fries etc. C.Finance/Accounting
After being purchased for $2.7 million in 1961, McDonald's corporation went public in 1965. By 2001, McDonald's has over 30,000 restaurants and sales of $24 billion. Each year sales and revenues of McDonald's corporation were increasing combined with net income of the company holding steady at around 1.5 billion dollars yearly. D.Production/Operations
Mass production was the key to success for McDonald's. The business was started as a drive-in restaurant, but flourished with the new idea of "self-service." The two brothers that started the business set the kitchen up with the idea of producing food in an assembly line fashion to mass-produce while saving on time. This set the standard for how fast food' would be made.
Suppliers delivered the packaged food to McDonald's restaurants where workers would prepare the food as customers placed their order. In McDonald's India, the two major suppliers of the fries were McCain Foods India and Lamb Weston. McDonald's fries were originally cooked in beef tallow, but to be deemed healthier they were then fried in 100% vegetable oil. To maintain the fries original taste the company decided to add beef flavoring to the fries while being cooked. E.Research and Development
Not mentioned in this case in detail. F.Human Resources McDonald's itself always stated to practice fair employment standards and invest in training it's employees. Many allegations were made that employment at McDonald's had been unsatisfactory to many. The charges ranged from low wages, to unsafe conditions and even discrimination.
V.Statement of the Basic Problem (see Appendix A) The basic problem of McDonald's Corporations is the lack of control of Top Management specifically on the planning of Marketing within the company.
VI.Strategic Alternatives 1. Hire a new marketing team that is willing to do the research necessary to succeed in many, very different markets. This will help educate the company about the religious and cultural impacts on the business. This can be a very time consuming task because the large number of countries in which McDonald's are located.
2. Have members of top management take a more active role in overseeing the important choices being made by the marketing department. This would help to combat major catastrophes from happening and leading to more allegations and lawsuits.
3. Create a separate department within the company to keep consistency among the many McDonald's franchises. While this would be a great tool in the overall operation of the company, there are probably too many franchises to be able to carry it out in a cost effective manner.
VII.Recommendations Both alternatives one and two should be combined for the overall success of improving McDonald's corporation. Marketing has done a terrible job in many areas and could use a fresh start, but must rely on top management for the ultimate say.
VIII.Implementation These alternatives can be put into place effective immediately. They should not bear large costs, with any costs relying solely on the hire of new employees and/or top management to compensate for the extra workload. The most important benchmark to judge our decisions will be customer satisfaction. This can be done simply by surveys, online or focus groups. In the long term the benefits may be seen on a larger scale by viewing the perception of the company in the US as well as globally.